Everyone knows that it can be overwhelming to purchase your dream house. But it can be impossible to buy a home if you have a bad credit history. However, you cannot start the home buying process with a bad credit history because it can be impossible to get a home loan.
We can say that bad credit history is like a roadblock in your home buying process. Moreover, a Richmond Hill mortgage broker will help you to get the best deal. So in this article, we will discuss all the vital aspects of buying a house with a bad credit history.
What does the mortgage broker consider a bad credit card score?
Many homeowners do not know that they cannot purchase the house with a bad credit card score. However, a mortgage broker does not require any minimum credit score to buy a home.
However, Government-backed loans have some credit score requirements, but it is much lower than others. So that is why the Government-backed loans are giving peace of mind to the lenders.
If you have a credit score lower than the 500, it will become uneasy about getting a mortgage to purchase a house. So many mortgage brokers will recommend you to improve your credit card score.
Can you purchase a home with a bad credit card score?
Everyone needs an answer to the above question. However, it is true that if your credit score is less than a 670 FICO score, it is considered to be a bad credit card score.
We can say that 580-669 will be the fair credit score to get a home loan. On the other hand, 300-579 is considered as the low credit card score.
However, a Richmond Hill mortgage broker will look out for some crucial things before providing you with a mortgage.
If you have a bad credit score, cash will play as a helping hand for you. It is true; you can get a mortgage loan with a bad credit score.
But you have to prepare yourself to pay a higher monthly payment due to the higher interest rate. Moreover, remember that you can improve your credit score and refinance your mortgage with better terms.
What are the home loan options for homeowners having bad credit score?
Conventional and Government-backed loans are the two best types for getting a loan with a bad credit score. However, Government-backed loans have the lower requirement for credit score than conventional loans.
Here will discuss some more loan options for homeowners having a bad credit score.
It is a type of loan backed up by the Federal Housing Administration. However, this loan type is a better option for first-time homebuyers. Moreover, 580 is the minimum credit score required for the FHA loan.
You also have to make a 10% down payment if you want to qualify for an FHA loan.
VA loans is a better option for an active-duty member of the armed forces. However, it is a type of loan backed up by the Department of Veteran affairs.
Moreover, you must have a 620 credit score if you want to qualify for VA loans.
It is a type of loan backed up by the Government. You can buy a home with a $0 down payment with USDA loans. However, you need a 640 credit score to qualify for the USDA loans.
How to improve your credit score?
Here are some things that can help you to improve your credit score.
1.Add a new account
You can add a new account to increase or overall improve your credit score. However, it will take 30-45 days to see the results of bulking your account.
2.Stay away from hard credit inquiries
Having more credit inquiries can negatively affect your credit score. It will lower down your credit score. So make sure to ask your Richmond Hill mortgage broker to have a soft pull on your credit.
3.Pay for deletions
Make sure that you do not have collections on your credit report. It will show that you borrowed money from anyone and did not pay it back.
So make sure that you do not recieve collection on your credit history to increase your credit score.
We hope you get a better understanding of buying a house with a bad credit score. However, many home loan options can help you to purchase your dream house. The Richmond Hill mortgage broker will provide you with a mortgage, but you have to prepare yourself to deal with the higher interest rate.